California Moves to Prohibit Sweepstakes Casinos with Unanimous Legislative Support

Assemblymember Avelino Valencia introduced AB 831, which makes it a misdemeanour offence to run or assist ‘dual-currency’ sweepstakes casinos, which imitate real-money casinos and sports betting but do not adhere to state gaming laws.

Concern over the proliferation of sweepstakes casino websites in California has grown, as evidenced by the lack of opposition to the legislation in the Assembly voting.

These websites circumvent current gambling regulations by using two types of currency: a ‘gold coin’ for free play and a ‘sweeps coin’ that can be exchanged for cash rewards.

As part of a national crackdown, several states have introduced similar legislation this year, including Connecticut, Montana and New Jersey.

Support, Opposition, and Regulatory Context

The California Nations Indian Gaming Association and a number of tribal governments backed AB 831, claiming that sweepstakes casinos pose a threat to tribally regulated and controlled gaming.

The Public Safety Committee’s chair, Senator Jesse Arreguín, clarified: “Online sweepstakes casinos have grown in popularity by taking advantage of loopholes and avoiding the state’s gaming framework.”

Some tribal groups opposed the legislation, arguing that it was hurried and might restrict tribes’ future economic prospects.

The “gut-and-amend” legislative process was criticised by the Social Gaming Leadership Alliance and other industry groups. The groups claimed that the bill’s definitions were ambiguous and could affect legal promotional sweepstakes held by companies like McDonald’s and Starbucks.

In response, lawmakers changed the bill to remove traditional promotional sweepstakes and state lottery games.

Operators of sweepstakes casinos are under increasing national scrutiny for allegedly taking advantage of legal ambiguities.

For instance, earlier this year, New York Attorney General Letitia James issued 26 cease-and-desist orders to unregulated sweepstakes websites.

In response to fresh regulatory pressure, Eilers & Krejcik Gaming recently lowered its 2025 US sweepstakes market revenue forecast to $4bn (£2.9bn), which is still 16% higher than the previous year but is expected to decline in 2026.

California’s law, if signed by Governor Newsom, will rank among the most robust prohibitions on dual-currency sweepstakes casinos in the country.